Givaudan Reports Strong Q3 Results with 14% Organic Sales Growth

Givaudan has announced its third-quarter results, showcasing an impressive organic sales growth of 14.1%, which exceeded the market consensus of 10.4%. This growth was primarily fueled by a notable volume increase of 12.1% and a pricing rise of 2%, significantly impacted by foreign exchange rates.

The results not only surpassed the company’s own estimates but also closely aligned with the projections provided by UBS analysts, who had predicted a slightly higher organic sales growth of 10.5%.

In terms of financial performance, the company’s total reported sales for the quarter reached CHF 1,907 million, marking a year-over-year increase of 10.2% and exceeding the forecast of CHF 1,857 million. This positive variance was influenced by a more substantial foreign exchange headwind of approximately 5%. Both of Givaudan’s divisions reported positive contributions to organic sales growth, with the Fragrance & Beauty division showing a remarkable 16.0% growth, well above the consensus estimate of 11.5%.

Meanwhile, the Taste & Wellbeing division achieved a 12.4% organic sales growth, surpassing both the consensus estimate of 9.0% and UBS’s forecast of 8.4%.

In terms of sales figures, the Fragrance & Beauty division recorded CHF 956 million, exceeding expectations by around 4%. The Taste & Wellbeing division also performed well, reporting sales of CHF 951 million, slightly above consensus estimates. Additionally, the Consumer Products segment within Fragrance & Beauty, accounting for about 67% of that division’s sales, experienced an organic sales growth of 13.1%.

The Fine Fragrance sector noted an impressive organic sales growth of 23.6%, outperforming UBS’s forecast of 15.9%. The Fragrance Ingredients and Active Beauty segments also delivered strong results, achieving an organic sales growth of 16.4%.

Regional performance varied, with significant contributions from South Asia, the Middle East, and Africa, which saw a substantial growth spike of 29%. This was a notable improvement from the 12.5% organic sales growth reported in the first half of the year. In Latin America, organic sales growth reached around 21.5%, bolstered by foreign exchange effects, while Europe and North America recorded growth rates of 8% and 6%, respectively. The Asia Pacific region reported an organic sales growth of 12%.

Despite the strong performance, Givaudan has maintained its guidance for the year, projecting an average like-for-like sales growth of 4-5% and anticipating free cash flow to sales to exceed 12% through 2025. Looking ahead to 2024, the company compiles consensus estimates indicating an organic sales growth of 10.4% with revenues projected at CHF 7,328 million and a comparable EBITDA margin of 24.2%.

Analysts at UBS expressed optimism, indicating that they expect the shares to outperform following the third quarter’s results, which exceeded raised expectations.